Banks see big spike in sales of life insurance

New life insurance premium levels at banks leapt by nearly 60% during the third quarter, beating the overall industry’s growth for the second consecutive quarter, according to data from Kehrer-LIMRA. Total sales of individual life insurance across the country were flat during the third quarter, compared with where they were in the comparable 2008 period. During the first nine months of 2009, sales of individual life insurance actually fell 11% when compared with the first three quarters of 2008, a Kehrer-LIMRA report showed. By contrast, life insurance sales in the bank channel grew by 32% for the first nine months of 2009, along with the sudden 59% spike in sales during the third quarter. Kehrer-LIMRA pointed out that banks receive lump-sum single-premium payments for life insurance products, which may explain the spike in sales. The market volatility that hurt variable insurance products had less of a negative effect on life insurance with single premiums. Overall, variable-life-insurance products took a beating since the economic downturn; declining markets hurt the growth of cash values in those policies: Kehrer-LIMRA data reveal that variable life insurance had a 64% decline in premiums during the third quarter when compared with the comparable period in 2008. Bank representatives may be turning more to life insurance as the current investment environment has become hostile for fixed and variable annuities — the bread-and-butter sales for those reps. “Interest rates on fixed annuities are low, and variable annuities have become more expensive, while the benefits have been watered down,” Scott Stathis, managing director at Kehrer-LIMRA, said in a statement. “Consequentially, bank reps have become more receptive to adding life insurance to their sales mix.”